Romanian banks are obliged. Announcement for Romanians who have bank loans

Before foreclosure, banks must help their customers overcome the situations that generated the non-payment. The role of the Center for Alternative Dispute Resolution in Banking (CSALB) will increase.

Before foreclosure, banks must help their customers overcome the situations that generated the non-payment

Banks must prove that they have tried to restructure debts with payment delays of more than 90 days for all types of loans. Restructuring measures must be tailored to the consumer’s situation and may include refinancing, deferment or suspension of installments, interest rate changes, currency conversion or partial debt forgiveness. These measures are provided for in the Government’s Emergency Ordinance no. 15/2024 (initially introduced in GEO no. 52/2016 regarding mortgage loans).

They are also solutions that conciliators have proposed in negotiations between consumers and banks since 2016, within the conciliations at the Center for Alternative Resolution of Disputes in the Banking Domain (CSALB). Thus, the new legal obligation could stimulate amicable solutions within the CSALB, both for credits that can be subject to enforcement and for those already in the process of enforcement.

The year 2024 began with a significant legislative change

According to Ciprian Chiorean, legal director at CEC Bank, the year 2024 started with a significant and positive legislative change for consumers, which will strengthen their relationship with banks. Government Emergency Ordinance no. 15/2024 imposes on creditors the obligation to demonstrate that they have tried to restructure loans in cases where consumers could not pay and reached the foreclosure phase. Thus, the bank must take concrete actions to improve the contractual relationship with the client who has difficulties in making payments, before starting the execution of the guarantees.

Although banks previously had recovery and restructuring measures, the ordinance emphasizes this obligation. This is good news for both consumers and banks because no bank wants to have customers in foreclosure, which generates additional costs through provisioning, enforcement expenses and bad loan management. Banks are interested in having financially healthy customers, and the relationship with customers is one of partnership.

“Banks are interested in having financially healthy customers, and the customer-bank relationship is one of partnership. The bank’s interest is to resolve any potentially conflicting situation as quickly as possible.

We often do this through CSALB and we notice that the consumer-bank relationship has settled down a lot compared to 15 years ago. A better understanding of contracts and contractual clauses has a decisive contribution in this relationship,” he said on the CSALB podcast.

There is a category of vulnerable customers in every bank

The more than 1,000 banking units nationwide and 1,300 ATMs represent an important asset, considering the moral duty towards Romanians to facilitate financial inclusion, especially in areas where other banks reach more difficult. The bank aims to serve even rural areas, where sometimes the only connection to the banking system is a CEC Bank unit or ATM. That is why CEC Bank will maintain this network, despite the general tendency to reduce territorial units.

In terms of customer relations, the bank wants to combine technology with human presence because people are increasingly reluctant to communicate with robots. Although the bank is considering digital solutions to ensure quick access to its services and products, the human factor remains essential.

CEC Bank ranked 3rd in the banking industry, registering a 35% increase in assets compared to the previous year. By acquiring the Rural Credit Guarantee Fund, it became a major banking group and is now working intensively on establishing an insurance company. In all projects, the bank emphasizes human interaction. It wants to give its customers the opportunity to interact with a bank employee. However, rapid growth also comes with risks, the most significant of which is online fraud.

There is a category of vulnerable customers in every bank who are not familiar with the use of digital tools. Therefore, they become prime targets for cybercriminals. Instant payments, used by most banks, are the most targeted in online fraud. Users are therefore advised not to disclose their PIN or access unauthorized links, whether received via email or SMS.

The role of CSALB will increase

“Do you anticipate any changes caused by this legislative change? Will there be more amicable agreements within CSALB to avoid cases of forced execution?”, asked journalist Vasile Coman.

“Certainly there will be a greater openness to sitting the parties at the negotiating table, before reaching a conflict situation. And CSALB provides the framework for such dialogue. People understood the need for faster resolution of disputes they have with banks, especially if their problems ended up in court. Unfortunately, the legal system does not allow these cases to be resolved within a shorter period of 12-24 months. On the other hand, the average resolution time within CSALB is only 25 days.

To understand why there is a desire among consumers to resolve their grievances with banks amicably, I give you two relevant examples: we have had conciliation cases where consumers were magistrates who came with requests to CSALB. In other words, the benefits of conciliation have come to be understood even by some representatives of the judicial system.

The magistrates understood that, despite being much more familiar with the courts, they have more to gain in an alternative court procedure, conducted within the CSALB. Moreover, we also reconciled consumers who came from the banking system, but had dysfunctional relations with the bank, some even having the status of employees of the respective bank.

The disadvantage of foreclosures or court cases being settled at CSALB is that, in these cases, the claims of the parties are already expressed. The exact level of the debt is known, the credit institution’s expectations regarding the payment term, how much the consumer is willing to pay. Obviously, when it comes to foreclosure, there is also a degree of frustration because some steps have been taken and we could run into various hubris or ambitions. But in general, there is a greater willingness on the part of the parties to accept a compromise”, explained Mircea Stroe, CSALB adviser.